I Am has some good beats, although it sounds dated today which is the case of a lot of flashy late 90s production (see: Diddy, Jay, DMX, etc). Nas' failure is largely post-I Am to me, although that album is very mixed. I honestly believe Jay would not have much of an argument if Nas had not released Nastradamus. That album was trash despite a few gems (Come Get Me, Project Windows). Nas was vulnerable after that, and Jay capitalized for short term success. If the original I Am had come out featuring those Lost Tapes tracks he would have been untouchable.
The early aughts were full of great production, and Rocafella had two of the best producers as in-house producers (Kanye and Just Blaze); they also had Heatmakerz. Meanwhile Nas had...Remi. He refused to bunker down with Premo, who at the time was still making good tracks (2nd Childhood comes to mind). To me that run after Stillmatic is the issue - God's Son (which is a good album), Street's Disciple, HHID, and Untitled were all marred by questionable decisions. As I said God's Son is generally viewed as a good album, but even it had that shitty Zone Out track. I refuse to listen to Street's Disciple to this day because I don't want to give Nas that L lol. HHID has some HORRIBLE beats. And of course Untitled is mixed but largely has bad production.
Meanwhile Jay, Kanye, TI, Wayne, and nearly every other noteworthy rapper of the time was rapping over dope shit.
My final nerd point: I believe Nas is positioned for a renaissance. Life Is Good was a great album despite a few questionable beats, and since then he has even admitted he doesn't pick great beats. If Nas can just do the right thing, like get Q-Tip to exec produce his next album, he'll release a great album. Unlike most of the dudes of that era, he's still spitting great shit. He just needs beats.
